AgriCann implements layoffs, other cost-cutting measures in bid for survival

Struggling British Columbia-based AgriCann Solutions Corp. remains under a cease trade order from the British Columbia Securities Commission amid its three-month stall in cannabis production. The company also laid off an undetermined number of staff in order to cut costs and said it may have to exit the public sphere altogether.

The company has been under the cease trade order since April 9, but efforts to rectify the situation have thus far hit a wall, company leadership said in a statement Thursday, and the best way forward may be to a return to private ownership from the public markets.

“Following the resignations of our CEO in December and CFO in February, the company has struggled to find its feet,” AgriCann said, referring to the departures of Adam Sancewicz and Dome Duong, respectively.

Since the last corporate update in April – when AgriCann was placing a big bet on its relatively new acquisition of competitor Newline Ventures – a consultant hired at Newline quit unexpectedly “without providing recommendations or a meaningful path forward to the board, ostensively for personal reasons.”

Similarly, an accountant hired to take over for ex-CFO Duong “failed to complete the Company’s expected December 31, 2023, (third-quarter) consolidated reporting obligations,” which meant the cease trade order couldn’t be lifted and AgriCann can’t access public financing.

In order to sell cannabis, licensees must purchase federal excise stamps from the Canada Revenue Agency, adding costs and other hurdles to retail business partners, the company warned.

“Stamp costs are substantial, along with the compliance and handling costs required for secured storage, transportation, administration, tracking, affixing, reporting, recordkeeping, and related procedures demanded at the Federal level,” AgriCann stated. “This financial burden is particularly disadvantageous to specialized craft growers, nurseries and marketers. OCS (Ontario Cannabis Store) sales have completely shut down since Newline fell behind on excise payments.”

The bottom line is that most operations at AgriCann appear to be frozen, and Newline is only selling off existing inventory as a “bare-bones operation,” the company reported.

Perhaps the most glaring signal of how dire the situation is for AgriCann is that it told shareholders in a press release that it may not be able to afford a $50,000 audit, a standard requirement for each fiscal year, which for AgriCann ends March 31.

The letter, signed by Chairman Rob van Santen, also noted that the board of directors and company officers own 63% of AgriCann shares, meaning they’re directly invested in turning the struggling company around.

“Remaining board members and officers have been committed to finding a path forward, but financial support is limited and can no longer be assured,” the company wrote. “Considering the current financial situation amidst an environment of escalating costs and regulatory barriers, it is increasingly unlikely shareholders will see a return on their investment. At this point, privatization may be the best option going forward and is being considered.”